May 25, 2022

Crypto funds are increasingly investing in traditional assets: is the market transformation coming?

Crypto funds are increasingly investing in traditional assets: is the market transformation coming?

Some large cryptocurrency funds noticeably“dilute” their portfolios with traditional assets. For example, in the second half of April it became known that their value in the Ethereum Foundation reached $302 million. Is this a way for organizations to survive the turmoil or marks the beginning of a change in the market paradigm? Aaron Chomsky, head of the investment department of ICB Fund, told BitCryptoNews about this:

I don't think it's worth drawing any far-reaching conclusions based on the reports of just a few companies. Moreover, in the same Ethereum Fund on non-cryptocurrency assets account for only 18.8% ofoverall portfolio of the organization. It is also worth considering the fact that these can simply be fiat reserves, which are needed both to ensure the life of offices and to take part in investment rounds in promising projects. In the second case, these investments are quite capable of transforming into "cryptocurrency" ones in the future.

In fact, examples of investments in projects,which are not present on the crypto market, there are a lot. In particular, the other day, $505 million, including from representatives of the crypto industry, was attracted to Crusoe Energy Systems, a mining company that wants to expand its capacities operating on associated gas, and thereby reduce the environmental burden.

It is also common to find a situation wherethere is funding for venture capital funds, which will then use the capital to invest in Web3 projects. Here, the organization itself chooses the option of formalizing such actions: as a crypto or fiat investment. In other words, since we don’t get any specifics, we can’t speak with particular confidence about any trends.

It should also be taken into account that venturescontinue to fund blockchain projects even now, when the market has been in a correction state for many months. The big deals last week alone are: $400M for Framework Ventures, $120M for Rario, $30M for Scroll, $12.5M for Mintbase, $10M for LimeWire, and $10M for Decent DAO.

Thus, even if we assume thatcrypto-investors want to diversify their portfolios and place part of the money outside the overly risky industry, then this is obviously happening without much negative effect on promising decentralized projects. And in general, there is nothing wrong with the fact that there is a desire to protect against the risk of allocating significant capital in one area.